car payment after chapter 13 ending

[ilbcertain]

We are 6 months away from our 3 year chapter 13 ending. We pay $500.00 a month and of that $340.00 goes to our car. When completing our BK in December our lawyer said they will continue to take money from us and pay the whole 500 dollars straight towards the car until it is paid off. We will currently owe around 9K on our car but its getting up there in miles. It currently has a Bluebook value of 10k. Is it possible to trade our car in for a new one thus paying off our loan and ending the payroll deductions and being completely done with the BK stuff? and finally, when does it show that we ended our BK? In December when the 3 years are up or when we finally pay the car off?

Thanks

[andy158]

If your car was crammed down and the payment was part of the bk, the payments will stop after the three year period and the title will be released. It sounds like the majority of your payment has been going toward the car loan. Did you have any unsecured debt? Something is being misunderstood.

[LadyInTheRed]

Sounds like your plan is longer than three years. You can probably trafe in the car and modify the plan to emd early. But, you'll need court approval and will incur attorney fees. Talk to your attorney about your options.

[kornellred]

It seems that many debtors do not understand the status of an auto loan that still has a balance due when the Chapter 13 payment plan is completed. When you receive a Chapter 13 discharge, the remaining balance due on an auto loan is also discharged. The debtor no longer owes the lender a red cent. However, the vehicle does not belong to the debtor thereby. The lender has a lien on the vehicle, and liens are not void due to bankruptcy discharge. The only way the debtor can secure the title to the vehicle is to pay off the discharged amount. If that can happen or how it can happen is up to the lien holder.

Once a debtor has fulfilled all the obligations of a Chapter 13 confirmed plan, then the debtor is entitled to a discharge of all eligible debts. Discharges are not withheld until a debtor finishes paying for a vehicle.

[andy158]

Does that include a car that is crammed down in a 13 kornellred? Our car was crammed down in our plan and was obviously agreed to by the bank at our confirmation. Our attorney has told us when our case is over the lienholder will release to us the title of the vehicle upon notice of discharge. Granted it won't be worth much since it has nearly 200k on it. However, if what you are saying is true one is in limbo without the title. You can't sell it or even junk it without a valid title. Only option is to sell it for parts and explain the situation to the perspective buyers. Then what happens to the outstanding balance? Will the bank eventually write it off as an unrecoverable debt? Just curious.

[kornellred]

Cram downs and reaffirmations are separate animals, andy158. For a cram down, the loan must be at least 2 1/2 years old, and the vehicle must be worth less than the remaining payments. In that case, the lender is forced to accept the payments made within the Chapter 13 plan and release the title to the debtor upon completion of the plan. The BK court must allow the cram down - it is not automatic.

In a reaffirmation, the auto loan is declared to be outside the Chapter 13 and the remaining loan amount upon completion of the Chapter 13 plan is not discharged. The lender and the BK court must both allow the reaffirmation. (I know you did not ask about this)

[justbroke]

Please pardon me while I remove any confusion, which I had from several posts.

A Chapter 13 Plan would normally pay off a car loan entirely over the course of the Chapter 13. If the car is crammed down, the Chapter 13 discharge absolutely discharges any remaining balance as an "unsecured" debt, and the secured part, protected by the lien, would have been satisfied. At the time of discharge, for a crammed down car loan, the debtor is absolutely entitled to the lien being released.

A Chapter 13 Plan would also normally pay off a car loan entirely over the course of the Chapter 13 when the Chapter 13 is set for 60 months.

The only time you would not own your car outright, without a lien, at the conclusion of a Chapter 13 is, somehow, the vehicle was so new that you could neither cramdown nor "refinance" the vehicle over the term of your Chapter 13. This usually only happens in 36-month plans. I have not read about many cases in which this could occur, but I suppose it could happen.

[kornellred]

I completed my 54 month Chapter 13 (payments from March 2008 through August 2012) and was discharged in December 2012. I had purchased a new vehicle with a 72 month loan, the first payment of which was September 2007. I was paying down the vehicle outside of the Chapter 13 plan.

Upon my discharge in December 2012, I still had 8 more payments to make on the vehicle. But my loan balance went to zero dollars with the discharge. I called the lender to see if this was a mistake, and they said no - the remaining balance was no longer collectable due to the Chapter 13 discharge. They also said that they would repossess the vehicle unless I paid the discharged balance. I was, and still am, making payments via ACH authorization. I have 2 more payments to make, and the lender will release the title to me (I assume).

Officially, this is not supposed to happen, but it definitely happened in my case. My attorney never offered an explanation or described any alternatives when formulating my Chapter 13 plan, nor did he explain what would happen at the completion of the plan. I assumed (there's that word again) that my vehicle loan was simply outside of the Chapter 13 plan altogether, which would be tantamount to a so-called "ride-through". But, since the loan balance was discharged, it could not have been the case.

I do not know if I have been dispensing incorrect information with respect to vehicle loans in Chapter 13 that do not involve cram down or reaffirmation, but based upon my actual experience, the information is correct if my case was not an anomaly.

[justbroke]

It happened for two reasons. First, that you paid outside the plan. Second, because you did not re-ammortize the payments inside the Chapter 13 plan, which is the norm for 60-month and 36-month Chapter 13 plans. The reason that your attorney did not re-ammortize the loan and pay inside the plan could be simply that you could not create a feasible plan allowing you to re-ammortize the loan to 60-months (since you just purchased the vehicle). The problem may have been one of affordability of the plan payment.

The lender treated the debt correctly by showing the balance as $0 since the debt was "scheduled" in your Chapter 13, and everything, even secured debt, is subject to the discharge. (With the exception of well recognized non-dischargeasble items such as fines and most taxes, as example.)

I would say that your case was atypical.

[andy158]

Thanks for the clarification.

[Pandora]

Interesting thread - which brings yet another question to my mind

Our 2nd mortgage is being stripped - is with a CU; however our one car that we still owe on is also with same CU and is outside of our plan. We owe a little over $2K on it and it will be paid off well before our plan is (20 months left in plan).

Question is: Obviously cross collateralization comes into play with CU's - but how does that work when you have filed CH 13? The 2nd will be stripped and obviously unsecured - so....will we get title to car once its paid off or is the CU going to try to use the cross collat. and not release the title even though cars been paid for?

My thought is since the 2nd is now considered unsecured debt and we've never missed a payment with the car, then the cross collat clause goes out the window.....right? Oh lawsy, someone tell me this is correct as I'm fully expecting a damn title to this car in about 9 months

[justbroke]

It is tough to gauge what the CU will do. I have read where they have tried to cross-collateralize a debt such as a stripped second against a car that was retained. However, if you receive the title back with the lien removed, then that would indicate that the cross-collaterialization was removed.

[karm43]

I had my car loan interest reduced was a 7 year loan included in my payment. I pretty sure it will be paid off. How would I check?

[justbroke]

I had my car loan interest reduced was a 7 year loan included in my payment. I pretty sure it will be paid off. How would I check?

You would check your plan and whether the payment was re-amortied to fit the life of your Chapter 13 plan. If you had a cramdown, because the vehicle "loan" was either older than 910 days or had been refinanced, then you would be paying off the vehicle over the life of your Chapter 13 plan.

The only way to tell is to look at your Plan.

[Pandora]

It is tough to gauge what the CU will do. I have read where they have tried to cross-collateralize a debt such as a stripped second against a car that was retained. However, if you receive the title back with the lien removed, then that would indicate that the cross-collaterialization was removed.

and therein lies the problem - We HOPE the cross-collat is removed and we receive the title free and clear - but.....

Man, I'll be one P.O'd woman if we pay this damn car off in full and they refuse to release the title to us. Guess we'll keep our fingers crossed and see what transpires in a few months.